Nordic Semiconductor Asa · OSL:NOD

Nordic Semiconductor Asa — Q1 2020 Earnings Presentation

31 slides from Nordic Semiconductor Asa's earnings presentation, Apr 21, 2020

1. Slide 1: Quarterly Presentation Q1 2020

   Quarterly Presentation Q1 2020 April 21, 2020

2. Slide 2: Disclaimer

   © Nordic Semiconductor Disclaimer The following presentation is being made only to, and is only directed at, persons to whom such presentation may lawfully be communicated (“relevant persons”). Any person who is not a relevant person should not act or rely on this presentation or any of its contents

3. Slide 3: Solid Q1

   © Nordic Semiconductor Solid Q1 Revenue in high end of guidance – gross margin above  Bluetooth revenue USD 51.2m (+37.1%) Revenue Gross margin  Proprietary revenue USD 15.4m (+23.4%) USDm  Cellular IoT revenue of USD 1.1m 70.2 51.9%  Gross margin of 51.9%, driven by cost reductions and product

4. Slide 4: Increased order backlog

   © Nordic Semiconductor Increased order backlog Backlog (USDm)  Order backlog of USD 123m, +39% 140 compared to Q1 2019 and 16% above 120 YE’19  Supported by customers placing early 100 orders to secure supply 80 60 40 20 0 Q1 2015 Q1 2016 Q1 2017 Q1 2018 Q1 2019 Q1 2020 4

5. Slide 5: Organization adapting swiftly to COVID-19

   © Nordic Semiconductor Organization adapting swiftly to COVID-19  Employee health has been top priority – no COVID-19 cases registered so far  Full compliance with rules and recommendations from local and national authorities:  Extensive remote work (~90%)  Severe travel restrictions  Limited p

6. Slide 6: Embracing our social responsibilities

   © Nordic Semiconductor Embracing our social responsibilities Joined UN initiative to prevent virus spread in developing countries 6

7. Slide 7: Nordic inside 20+ relevant designs

   © Nordic Semiconductor Nordic inside 20+ relevant designs Prevent Monitor Track  Healthcare set to drive demand for connectivity  First deployments largely based on repurposing of existing products  Second wave to be used for outpatient monitoring  Long-term market move towards the real “connect

8. Slide 8: Manageable supply chain disruptions in Q1

   © Nordic Semiconductor Manageable supply chain disruptions in Q1 Nordic’s value chain, illustrative  Industry supply chains affected by plant closures in Asia for parts of January and February  Longer pause than normal around Chinese New Year, gradual recovery through March Taking action to reduce

9. Slide 9: Demand growth continued throughout Q1

   © Nordic Semiconductor Demand growth continued throughout Q1 Nordic’s value chain, illustrative  Nordic’s distributors maintaining normal operations, with customer deliveries continuing on growth trajectory through March  Distributor inventories remaining at moderate levels 9

10. Slide 10: Low visibility on future end-user demand

    © Nordic Semiconductor Low visibility on future end-user demand  Higher uncertainty and lower visibility due to the coronavirus measures and knock-on effects  Three main uncertainties affecting end-user demand for remainder of 2020:  Length and magnitude of extraordinary measures to limit the spr

11. Slide 11: Liquidity, solidity and flexibility

    © Nordic Semiconductor Liquidity, solidity and flexibility INCREASED CASH POSITION CASH AT HAND 124  Asset light model, with outsourced production and distribution USD m  People and IP the main input factors – all hands required to meet our current development and delivery SOLID EQUITY POSITION pl

12. Slide 12: Maintaining long-term strategy and targets

    © Nordic Semiconductor Maintaining long-term strategy and targets Strong strategic pillars Solid position Ambitious targets  Lead on connectivity  Market leader in  Target of becoming a  Excite developers Bluetooth Low Energy USD 1 billion company  Strong ties to vertical within the next five y

13. Slide 13: Q1 Business Update

    Q1 Business Update

14. Slide 14: Strengthening certification market share

    © Nordic Semiconductor Strengthening certification market share Bluetooth Low Energy end-product certifications, LTM* 1,600 46% End-product 1,400 41% 42% 39% Nordic certifications, TI Nordic Q1 20 1,200 34% 33% 521 608 Dialog 1,000 459 142 Qualcomm 800 412 258 Infineon 49% mkt share 600 SiLabs 400 1

15. Slide 15: New product launches in Q1

    © Nordic Semiconductor New product launches in Q1 Panasonic Industry Accent SimpliSafe IoTeX Signetik nRF52840 nRF52832 nRF52 nRF9160 nRF9160 Module ‘COVID-19 BLE Smart Lock Secure asset tracker Pre-certified, battery- wristband’ using blockchain powered cellular IoT- based module platform. 15

16. Slide 16: Many new healthcare user cases coming up

    © Nordic Semiconductor Many new healthcare user cases coming up Masimo Safety NetTM Kinsa Health Smart thermometers  Cloud-based patient management solution  Helping clinicians care for patients remotely in hospital settings  Tested at University clinics in Ohio, Pennsylvania and New Jersey  Wea

17. Slide 17: Continuing to launch new products

    © Nordic Semiconductor Continuing to launch new products  Launching nRF52820 to support the lower-end of the nRF52 Series for budget-constrained applications  Full-speed USB 2.0  Bluetooth 5.2, Mesh, Thread, ZigBee nRF21540  64MHz M4F with 256kB RF Front-end module Flash and 128kB RAM  Supports

18. Slide 18: Cellular IoT moving forward

    © Nordic Semiconductor Cellular IoT moving forward Regulatory certifications overview  Q1 revenue of USD 1.1m and gaining traction with new designs  New software makes customer migration to cellular IoT easier  New nRF Connect SDK release unifies the software platform for all Nordic products  Bl

19. Slide 19: Further integrating ESG into our strategy

    © Nordic Semiconductor Further integrating ESG into our strategy  IoT holds unique position to enhance sustainability  We commit as a signatory to UN Global Compact and support UN Sustainable Development Goals (SDGs) www.nordicsemi.com/ESGreport 19

20. Slide 20: Financials

    Financials Pål Elstad, CFO

21. Slide 21: Revenue in high end of guidance range

    © Nordic Semiconductor Revenue in high end of guidance range Quarterly revenue (USDm) YoY revenue growth of 33.5% 82.2 83.1  Growth in all areas, from relatively weak level 70.5 in Q1’19 70.2  Bluetooth accounting for 73% and proprietary for 22% of total revenue 52.6  Continued strong revenue con

22. Slide 22: Year-on-year revenue growth in all markets

    Excluding Celluar IoT, ASIC s, Consulting and other revenue for individual markets © Nordic Semiconductor Year-on-year revenue growth in all markets Consumer Building/ Group Electronics Wearables Retail Healthcare Others USDm USDm USDm USDm USDm USDm 70.2 24.5 11.4 13.2 5.5 12.1 +33.5% -15.6% +16.0%

23. Slide 23: Gross margin remaining solid

    © Nordic Semiconductor Gross margin remaining solid Gross margin (%) 54% Gross margin 51.9%, above indicated 51.9% guidance, mainly driven by 51.6% 52% 51.2% 51.0%  Favorable product mix, with a 50% 49.8% higher share of more complex high value SoCs 48%  Gross margin expected at ~50% in 46% Q2 202

24. Slide 24: Operating model performance Q1 2020

    © Nordic Semiconductor Operating model performance Q1 2020 Gross margin 51.9% Q1 2020 Q1 2019 R&D Revenue USD 70.2m USD 52.6m +33.5% Revenue in high end of guidance range short- range 17.3% R&D 51.9% 51.0% cellular IoT Gross margin +0.9pp Favorable product mix in the quarter 10.0% USD 36.4 USD 26.8

25. Slide 25: Cash operating expenses

    © Nordic Semiconductor Cash operating expenses  YoY cash cost increase of 12.7 % shows Cash Opex* (USDm) continued disciplined growth execution  Continued favorable FX development Salary:  Number of employees increased by 14.5 % 23.4 24.1 to 799 over the past last 12 months 20.0 21.5 21.4  Growt

26. Slide 26: Year-on-year EBITDA improvement

    © Nordic Semiconductor Year-on-year EBITDA improvement EBITDA (USDm) and margin (%), quarterly EBITDA (USDm) and margin (%), LTM 15 30% 45 30% 21.3% 10 16.9% 20% 30 20% 16.3% 8.4% 5 10% 15 12.7% 10% 9.7% 7.5% 0 0% 0 0% -1.4% -5 -10% -15 -10% Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Q1 2019 Q2 2019 Q3

27. Slide 27: Capex development

    © Nordic Semiconductor Capex development Capex (USDm) 8.0 8.1%  Capex of USD 3.8m, slightly below 8.0% 7.0 guidance 6.4% 6.0 5.8%  Q2 2020 guidance at similar level 5.4% 5.0 4.0 3.0 2.0 1.0 0.0 Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020 Total Capex Capex in % of revenue 27

28. Slide 28: Strengthened cash position

    © Nordic Semiconductor Strengthened cash position Cash Flow Q1 2020 (USDm) Increased cash position  USD 33.7m cash inflow during Q1 2020  Drawn USD 40m on RCF to safeguard liquidity position  NWC/LTM revenue at 25.2% (24.2% at year-end 2019) Continued disciplined cash strategy  Tight cash manage

29. Slide 29: Summary and Q&A

    Summary and Q&A Svenn-Tore Larsen, CEO

30. Slide 30: Solid Q1 - continued uncertainty in Q2 and beyond

    © Nordic Semiconductor Solid Q1 - continued uncertainty in Q2 and beyond  Q1 revenue in high end of guidance, Q2 2020 guidance gross margin above, and disciplined operational execution Revenue Gross margin  Backlog supporting Q2 USDm  Continued high uncertainty 75-85 ~50% – Supply chain risk 6% -

31. Slide 31: Q&A

    Q&A NORDIC SEMICONDUCTOR

Nordic Semiconductor — Q1 2020 Earnings Presentation on 6ix